Capitol Hill weighs GOP payroll tax gambit

House lawmakers are returning to Capitol Hill to weigh a proposal by GOP leaders to extend the 2-percentage-point cut in the payroll tax through the end of the year and add the approximately $100 billion cost to the nation’s $15 trillion-plus debt instead of scrounging around the budget for ways to pay for it.

In the Democratic-majority Senate, a top leader said the proposal was “a major step forward” even as other Democrats worried it could jeopardize efforts to renew unemployment benefits for millions of the long-term jobless and efforts to forestall a scheduled cut in fees to doctors who treat Medicare patients. Those proposals would remain in the hands of a House-Senate negotiating panel that’s looking for spending cuts to defray the deficit impact.

The idea is sure to be a topic of conversation Tuesday at the weekly closed-door conferences of Senate Democrats and Republicans.

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House Speaker John Boehner, R-Ohio, Majority Leader Eric Cantor, R-Va., and GOP Whip Kevin McCarthy of California said the House could vote on the payroll tax measure this week but the renewal of jobless benefits and the Medicare “docs’ fix” still would have to be paid for with spending cuts elsewhere.

The GOP statement came after intense talks over the weekend failed to produce an agreement. Republicans were pressing for pay cuts for federal workers and requiring them to contribute more to their pensions. They recoiled at a Democratic proposal to raise Transportation Security Administration per-ticket airline security fees.

“Democrats’ refusal to agree to any spending cuts in the conference committee has made it necessary for us to prepare this fallback option to protect small business job creators and ensure taxes don’t go up on middle-class workers,” the GOP leadership statement said.

Without action by Congress by the end of the month, payroll taxes will rise for 160 million Americans. The 2-percentage-point tax cut delivers about $20 a week to a worker making $50,000 a year and a tax cut totaling $2,000 this year for someone making a $100,000 salary.

Democrats were encouraged and said the development could break an impasse over the payroll tax proposal and the other expiring provisions.

“We’ve been making the point that when (it comes to) tax cuts for folks at the very top, the House Republicans went to great lengths to change their rules to say you don’t have to pay for those,” said Rep. Chris Van Hollen, D-Md. “And yet they’ve been saying that when it comes to a short-term, 10-month payroll tax cut for middle-income people, all of a sudden you have to pay for it.”

But Democrats warned that decoupling the payroll tax from the larger legislation could jeopardize efforts to renew the jobless benefits and the fix to the Medicare payment formula.

“It’s completely irresponsible to leave behind nearly 5 million unemployed Americans whose benefits will expire and 47 million seniors and disabled Americans whose access to health care would be jeopardized,” said Rep. Sander Levin, D-Mich., a member of the 20-lawmaker House-Senate negotiating panel.